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Last Minute Tax Checklist!
Have you remembered everything you need to do this financial year? This is the last chance to make any payments this financial year so you can claim tax deductions in the new financial year! Here are a few common tax deductions and payments many Australians are able to claim:
1. Enrol in Education and Training
Sign up for any education or training courses you need before end of financial year. You may be able to claim a self-education tax deduction for course fees and other expenses if your course maintains or improves the specific skills or knowledge you require in your current employment, OR result in, or is likely to result in, an increase in your income from your current employment.
For instance, this is a perfect opportunity for professional trainers to update an older BSZ or TAA certificate to the new TAE40110 Certificate IV in Training and Assessment or get the essential new TAELLN411 unit. Health and safety professionals can likewise update to a new Certificate IV or Diploma of Work Health and Safety course.
Learn more about self-education tax deductions in our Self-Education Tax Deductions Guide.
2. Sign up to Professional Associations
Professional association membership fees are often tax deductible. If membership in an association would benefit you, now is the time to sign up! There are associations for most professions. For instance:
• Trainers can join an association like Velg Training
• Bookkeepers can join an association like the Institute of Certified Bookkeepers
• Project Managers can an association like the Australian Institute of Project Management
Please check with your professional association and tax agent to make sure you can claim membership fees as a deduction.
3. Sign up for Professional Indemnity Insurance
Professional indemnity insurance is often highly desirable and even mandatory for some professions. For example, financial services professionals must maintain professional indemnity insurance as part of their registration to provide BAS Agent or Tax Agent services.
Professional indemnity insurance can provide cover for:
• Civil liabilities (including but not limited to)
– Breach of Duty (privacy, confidentiality or fiduciary duty)
-Infringement of Intellectual Property
– Loss or Damage to Documents
– Unintentional breach of Warranty of Authority
– Breaches of Fair Trading Acts & Competition and Consumer Act
– Dishonest/criminal/fraudulent or malicious omissions or acts (through vicarious liability cover)
• Claims Investigation Costs
• Injury and Property Damage Claims
If you are an employee of a business or organisation, they will most likely already hold a professional indemnity insurance policy that covers you. If you are self-employed, it is definitely worth investigating PI insurance!
4. Make Donations
Donate to any charities you’d like to support this year! It’s an opportunity to support causes important to you; in addition, you get to decide how that portion of your tax is actually distributed.
If you are planning and budgeting to claim your donations as deductions, be careful about which charities you choose. The charity must be a “deductible gift recipient”. Many organisations are registered charities, but may not have “deductible gift recipient” status. This means you cannot claim a deduction if you donate to a non-“deductible gift recipient” charity.
5. Make Superannuation Co-Contributions
Low to middle income earners can make personal after-tax super contributions and receive up to $500 (called a co-contribution) from the Australian Government. The amount is automatically paid into your super account if you are eligible and make a personal contribution.
You can also salary sacrifice into your superannuation account. Salary sacrificed super contributions are only taxed at 15% (in the super fund), while your regular income could be taxed at up to 45%! If you start salary sacrificing in June, you won’t get much benefit this financial year. However it IS an ideal time to set it up so you max out your benefits next financial year.
6. Make Contributions or Apply for Other Accounts/Incentives/Schemes
There may be other special accounts, incentives or schemes you can benefit from this financial year. For example, First Home Saver Accounts enjoy a number of tax concessions and other benefits. Unfortunately they have been abolished in the 2014 Federal Budget and you can no longer open a new account. However, if you had a FHSA account before 7pm Tuesday 13th May, you are still able to claim many of the benefits. This means you can get a 17% co-contribution (worth up to $1020) if you deposit up to $6000 in your account (co-contribution ends after 2013-2014 financial year). You will still only pay 15% tax on interest earned until 1st July 2015 and then be able to access your money like a regular bank account.
7. Talk to a Registered Tax Professional
Taxation laws in Australia are complicated. There are far more deductions, incentives, schemes, deferments, levies, gearing and ways of dealing with different types of income to maximise your tax return than can be covered here. Did you know, for example, that in some situations you can claim medical and dental expenses as deductions?
It is a good idea to consult with a Registered Tax Agent to get personalised tax advice. Find out what you can do now, before the end of financial year, to maximise your tax benefit. Your tax agent can then help you prepare and lodge your tax return from July. Remember, the cost of dealing with a tax agent or accountant can be claimed as a deduction on next year’s tax return. Their expert advice could provide you more benefit than the value of their fee anyway! Finally a registered tax professional can also help you avoid penalties you might suffer if you miscalculate your claim, and tax professionals have professional indemnity insurance to protect you from losses resulting from their errors and omissions.